1. Field of the Invention
The present invention relates generally to systems for soliciting bids for the delivery of goods and services, and more particularly, to a system for constructing, distributing, and evaluating bids for the delivery of goods and services.
2. Background Information
Soliciting bids for the delivery of goods at some future time or for performing a future service has long been a common practice in both business and in personal transactions. Businesses and individuals alike prefer to know the cost of a particular product or service prior to committing to the purchase of the same, not only for purposes of deciding whether or not to make the purchase but also for budgeting for the product or service. Furthermore, multiple sources from which to select various products and services are preferred since the type and quality of products and services can vary by supplier.
Within the meaning of the present application, products and services can include any and all types of products and services that can be offered for sale by one party (vendor, seller, or bidder) and can be purchased or paid for by another party (buyer or user). An invitation or a request to submit bids for providing buyer-sought products and/or services is intended to represent buyer-determined specifications for the products and/or services preferred to be acquired by the buyer. The invitation to bid can be very specific, such as specifying the times and dates for performance and the detailed requirements for the particular products and services that will be required to satisfy the terms of the bid. For example, the invitation to bid can be for the proposed cost for scraping and painting a ship due into port on a particular date, with the refurbishing of the hull of the ship to be completed within five days. Or, the invitation to bid can be for the construction of a house, to conform to specific blue prints and materials requirements, to be built on the buyer's lot and to be ready for occupancy no later than six months after excavation for the basement commences.
The process of acquiring products and services via bids begins with a buyer or party determining the specifications, features, and limitations for the particular product(s) and/or service(s) sought, followed by reducing these criteria to a verbal or written invitation, solicitation, or request for bid. Within the meaning of the present application, these desired products and services will be collectively referred to as a list of performances. Compiling a list of requested performances can be very time-consuming, especially if the project being bid is complex, such as the construction of a twenty-story commercial building. The wording on the invitation is important so that the buyer and the bidder have a common understanding of the products or services that are being solicited. Otherwise, not only will the submitted bids not conform to the buyer's intentions, but the delivered products and performance will also be contrary to what the buyer expected to receive and for which the buyer anticipated being obligated to pay.
For the sake of consistency, the present application will use the term, “buyer,” to represent the party soliciting for bids to perform a certain project or service or to deliver a certain product. The term, “bidder,” will be used herein to represent the seller or vendor responding to the invitation to bid with a price and time quote for delivery of the requested product or service.
The process of drafting an invitation, solicitation, or request for bid can be simple, in the case of soliciting bids to mow a lawn during the summer; or can be complex and time-consuming, such as pricing the cost and time to construct a twenty-story commercial building. When complex bidding is involved, the buyer must devote a tremendous amount of time drafting the invitation, ensuring that all possible products and services are included, as well as procedural requirements, product quality requirements, performance specifications, and timing for delivery at various stages. Often the project being bid out is complex and unique, and the drafting of the solicitation is a custom process, with no means to incorporate past experiences by which the current bids may be evaluated.
The desired list of performances or products is usually reduced to writing and distributed to a plurality of potential bidders who the party inviting for bids takes into consideration for providing the products and services requested in the list of performances. Another difficulty with present systems for soliciting bids is communicating the request for bid to qualified bidders. Once drafted, the invitation to bid must be made known to a potential bidder to be effective. Traditionally, invitations to bid have been either verbal or in writing, and have been directed to specific, known vendors operating in the subject area of the products or services desired. Alternatively, the invitations have been broadly distributed through media publications and trade organizations to inform potential bidders of an opportunity to respond with an offer to supply particular products and services. Unfortunately, such a broadcast disclosure process both misses qualified bidders and invites unqualified bidders to submit a bid.
Once a potential bidder is aware of the terms of the invitation to bid, the potential bidder must evaluate the list of required performances or products to be supplied and must calculate the price at which the performances can be fulfilled or the products delivered, plus a profit margin. The bidder often accomplishes this calculation by estimating a price for each portion of the required performance or individual items requested. The total price is tabulated, and a portion is added for a profit margin and/or for contingencies, such as weather, delays, and labor problems. The completed bid is then sent by the bidder to the party inviting for bids (“buyer”).
Upon receiving the bids, the buyer must evaluate each of the bids to decide which bidder will be accepted to perform the requested service or deliver the needed products. However, the cost of performance to the buyer includes more than the simple price of the service or products to be provided. The buyer must also evaluate the bidder to determine if the bidder is qualified to perform under the subsequent contract and to determine the likelihood that the bidder will perform satisfactorily, such as on time, within budget, and with requisite quality. Often, however, the buyer has limited or no knowledge regarding how a particular bidder has previously performed in providing a service or products similar to the current subject of the bid. Therefore, the buyer has little information with which to forecast the quality of the delivered product or service as provided by a particular vendor.
A thorough bid analysis also requires checking the details of each bid against the corresponding prices quoted by the other bidders to determine how the prices quoted by individual bidders vary from each other. It is possible that a particular bid may not be the most favorable bid in view of the total amount but turns out to be the bid from which the buyer can expect the best result in terms of a price-performance ratio. Such an evaluation, however, is difficult and can only be carried out with relatively great effort under present bid evaluation processes.
For unique and complex projects, the buyer has a very difficult task attempting to estimate the appropriate cost range for the project, against which the received bids must be compared for acceptance or refusal. The buyer may rely on past contracts, but often the past contracts are at least somewhat different regarding the product or service to be acquired. Additionally, the buyer may not be able to remember particular past contracts or the details of the contracts. Furthermore, price reductions, discounts, and considerations will often vary from project to project, across time, and across geographic regions, thereby making the comparison between past contracts and the present bid project very difficult to accomplish accurately and easily. In some cases, price lists for certain products and services may be available to the buyer. However, it takes a comparatively great effort to estimate the costs to fulfill a particular list of performances or to deliver a specific list of products. Therefore, for a variety of reasons, the buyer often has limited or no criteria against which to compare the bid prices and times for delivery to determine whether a particular bid is a good candidate for acceptance.
Another difficulty in the bid process is that no matter how precise and demanding the invitation for bid may be, not all responding bidders submit bids in accordance with the invitation to bid, making the evaluation process difficult at best, as the buyer attempts to compare apples and oranges to determine the best bid to accept. Regardless, following the evaluation of all submitted bids, a bidder is selected to deliver the products and/or to fulfill the service, often based solely on the price bid for the products or services.
These and other drawbacks, problems, and limitations of conventional products are overcome according to exemplary embodiments of the present invention.